CUB blasts Nicor report

CHICAGO, Oct. 30, 2002 — An internal report by Nicor Gas detailing company wrongdoing dramatically understates the company’s misdeeds and their impact on consumers and fails to answer allegations that the company submitted false testimony to state regulators, the Citizens Utility Board (CUB) said Tuesday.

The report, issued to Nicor’s Board of Directors and announced in a press release concludes that the company committed no criminal acts or fraud and overcharged consumers by no more than $15 million.

CUB claims that it has evidence that the overcharges are much greater than that and the company may have committed perjury and fraud in its quest to increase profits under a controversial alternative regulatory plan. CUB called on Nicor to make public thousands of pages of documents.

The ICC is conducting a review of the company’s alternative regulation plan, approved in 1999. Testimony filed by CUB claimed that Nicor had manipulated the plan to overcharge consumers by $27 million. But, in June, a Nicor employee faxed a 14-page memo to CUB alleging that the overcharges were nearly five times that amount.

Working with access to information withheld from CUB and the ICC, the whistleblower apparently said the company’s deliberate manipulation of the plan had resulted in overcharges to consumers of as much as $133 million. CUB asked the ICC to investigate those allegations and to order refunds to consumers of any overcharges.

Under the alternative regulation plan, Nicor keeps half of any savings it achieves if it purchases gas below a benchmark price and consumers half of the losses if costs are above the benchmark. The plan is supposed to encourage Nicor to purchase gas more efficiently.

However, CUB and the company whistleblower believe Nicor manipulated the benchmark price so that the company benefited regardless of whether it improved its natural gas purchasing. The company also unfairly profited from the sale of inexpensive gas it had been storing for many years. As a result, consumers paid more than they should have on gas bills.

CUB has called on the ICC to scrap the plan and on Tuesday the company reported it will cancel it as of Jan. 1. The ICC is conducting hearings on the allegations and CUB’s request for refunds to consumers. The Illinois State Police also is investigating the company’s actions.

CUB is a nonprofit statewide utility watchdog organization created by the state legislature to represent the interests of residential and small-business utility customers. For more information on CUB and its efforts to protect consumers, visit www.CitizensUtilityBoard.org or call CUB’s Consumer Hotline at 1-800-669-5556.

Source: Citizens Utility Board

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